Alert: Morgan Stanley Remains Overweight On SanDisk, Cuts PT
Morgan Stanley commented on SanDisk Corporation (NASDAQ: SNDK) following its pre-announcement of weaker a Q1. The firm maintained an Overweight rating and cut its price target from $105 to $90.
Analysts led by Joseph Moore commented that they "were wrong on the stock" and "surprised at the magnitude of the shortfall."
Moore recognized that "there were company specific problems in 1h that would take a while to resolve," however, the analysts "thought with the tailwind of 1Q pricing less bad than expected" that the stock would be "ok."
There was also a "frustrating lack of detail about the problems that caused the weakness," according to Moore, yet the analysts thought it would be "much easier to work through these challenges in an improving supply/demand environment."
According to the analyst note, SanDisk attributed its problems to three factors:
- 1. "Delays in qualifying new product (likely in SSD, to reallocate supply away from the lost Apple socket they talked about on the 4Q call)."
- 2. "Weakness in enterprise SSD (which could be related at least in part to Fusion I/O)."
- 3. "Weakness in pricing in certain markets (we would guess emerging market smartphones and retail in currency affected areas; transactional pricing has not been that soft)."
Despite the frustration over a lack of details, the analysts concluded that confidence in SanDisk versus other NAND players had been "a bit shaken," however, a recovery was expected.
Looking ahead, the firm's 2015 EPS estimate was cut from $5.28 to $3.78 and for 2016, the EPS estimate was $6.20, down from $6.90.
Shares of SanDisk recently traded at $66.32, down 18.29 percent.
Latest Ratings for SNDK
|Mar 2016||Redstone Technology||Downgrades||Positive||Neutral|
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